fsco’s proposed solutions, service goals and …fsco has established internal service goals for...

FSCO’S PROPOSED SOLUTIONS, SERVICE GOALS AND PROCESSES FOR REVIEWING

DEFINED BENEFIT PENSION APPLICATIONS

CONSULTATION PAPER

Financial Services Commission of Ontario January 2010

TABLE OF CONTENTS

PURPOSE............................................................................................................................................. 3

BACKGROUND ON DEFINED BENEFIT PENSION APPLICATIONS.................................................. 3

OUTLINE............................................................................................................................................... 3

PART 1 – FSCO’S INITIAL CONSULTATION PAPER ......................................................................... 4

PART 2 – FSCO’S PROPOSED SOLUTIONS, SERVICE GOALS AND PROCESSES...................... 4

PROPOSED SOLUTIONS ................................................................................................................. 4 PROPOSED SERVICE GOALS ......................................................................................................... 7 PROPOSED PROCESSES................................................................................................................ 7

STAKEHOLDER INPUT........................................................................................................................ 9

CONSULTATION PROCESS................................................................................................................ 9

NEXT STEPS ........................................................................................................................................ 9

APPENDIX 1: HOW TO PROVIDE COMMENTS……………………………………………………...…….10 APPENDIX 2: Initial Consultation Paper on the Review of Defined Benefit Application Processing…………………………………………………………………………………………………..…..11

of 21

PURPOSE

This paper is designed to solicit pension stakeholders’ comments and feedback on the Financial Services Commission of Ontario’s (FSCO’s) proposed processes for reviewing defined benefit (DB) pension plan applications. It also seeks input on FSCO’s proposed service goals for complete and compliant DB pension plan applications.

This paper has been prepared based on the pension legislation currently in effect. The government has introduced proposed legislation in the form of the Pension Benefits Amendment Act, 2009, which may affect the current review processes. If the proposed legislation should become law, FSCO will review its processes to take into consideration any changes that may have an impact.

BACKGROUND ON DEFINED BENEFIT PENSION APPLICATIONS

FSCO is committed to delivering quality service to pension stakeholders, by administering and enforcing the Pension Benefits Act (the PBA) in a fair, efficient and responsive manner. It is responsible for providing front-line regulatory services to a wide range of pension stakeholders, such as plan administrators, industry professionals and pension plan members.

FSCO processes over 10,000 pension transactions per year, excluding annual information return filings. In fiscal year 2007-08, FSCO’s transactions included:

• 500 plan registrations, • 2,400 plan amendments, and • 3,000 general and member inquiries.

FSCO also processes DB pension plan applications, which require the consent of the Superintendent of Financial Services (the Superintendent). This includes applications for pension plan wind ups, surplus distribution and asset transfers.

These types of applications represent approximately three per cent of FSCO’s total transactions and are generally processed in a timely manner. However, past experience has revealed that processing complex DB pension plan applications consumes a significant amount of time and resources.

OUTLINE

This paper is divided into two parts:

• Part one discusses FSCO’s initial Consultation Paper on the Review of Defined Benefit Pension Application Processing.

• Part two explains FSCO’s proposed solutions, service goals and processes for reviewing DB pension plan applications.

After reading this paper, pension stakeholders are invited to provide their feedback to FSCO.

of 21

PART 1 – FSCO’S INITIAL CONSULTATION PAPER

FSCO previously circulated a Consultation Paper on the Review of Defined Benefit Pension Application Processing. (For reference purposes, the initial consultation paper is attached.) This paper was designed to solicit stakeholders’ comments and feedback on FSCO’s process for reviewing DB pension plan applications. It sought input on the entire application process – from the preparation of an application, to FSCO’s proposed decision – as well as appropriate timelines and performance measures.

To date, FSCO has received comments from:

• five pension advisory committees, which include actuaries, lawyers, accountants, investment advisors and multi-employer pension plans;

• 17 pension plan administrators/third party administrators; and • representatives from several pension associations and pension plans.

During FSCO’s initial consultation, pension stakeholders told FSCO that they would like more in-person meetings or conference calls, to discuss compliance issues with DB pension plan applications. If an application is contested, pension stakeholders would like to ensure that all affected parties are given the opportunity to make submissions. They also advised FSCO that it should adopt a less stringent and more pragmatic approach to applying trust law principles that emerged from decisions of the court in specific pension cases.

By applying these recommendations, pension stakeholders think FSCO would be able to process DB pension plan applications in a more accurate and timely manner. However, FSCO needs to create service goals for processing DB pension plan applications and publish them on a yearly basis, in order to set expectations with pension stakeholders.

PART 2 – FSCO’S PROPOSED SOLUTIONS, SERVICE GOALS AND PROCESSES

Based on the initial consultation paper’s stakeholder feedback, FSCO has identified several solutions that should address the problems that typically occur when processing DB pension applications. It has also developed service goals and two processes for reviewing DB pension applications. FSCO believes that it will take less time to review DB pension plan applications, if it has transparent service goals in conjunction with a more streamlined review process.

PROPOSED SOLUTIONS

FSCO’s proposed solutions address several problems in processing DB applications, in particular:

1. incomplete applications; 2. resolution of prior transactions; 3. contested applications; 4. analysis of trust law; and 5. a lack of service goals and performance measures.

of 21

1. Incomplete Applications

Information from the initial consultation paper:

Delays often result when applications are submitted without key documents (e.g., surplus applications are frequently submitted without relevant historical plan information and/or funding documents). Delays also occur when required supporting documentation is submitted before the application has been provided to FSCO (e.g., amendments are often received first, followed by notices and then applications).

Proposed solution:

• FSCO would create more standardized DB pension plan applications. In fiscal year 2010-2011, a standardized DB wind up report application would be created.

• Applicants would be allowed one opportunity to address any compliance issues. If an application remains non-compliant or incomplete, FSCO (or the applicant) would request a meeting or a conference call to discuss the issues. The meeting or conference call would be followed up with a second compliance letter. If the application still remains non-compliant, FSCO will issue a Notice of Proposal (NOP) and refuse the application.

2. Resolution of Prior Transactions


Delays frequently occur when pension plan administrators submit additional applications, before previous applications are processed. In some of these cases, FSCO must process and approve the applications in sequential order; therefore processing delays cannot be avoided.

To avoid these types of delays, applicants must resolve all issues with their first application, before submitting a subsequent application (e.g., if an applicant has not resolved partial wind up issues, such as failing to address or distribute a surplus, FSCO’s approval of the application will be delayed).

Proposed solution:

• FSCO would not delay processing an application if the prior transaction does not significantly affect the review of the application. If the prior transaction significantly affects the review of the application, FSCO may refuse to process any subsequent application until all issues relating to the prior transaction are resolved.

3. Contested Applications


Contested applications take longer to resolve than uncontested applications. This is because the Superintendent must understand and consider submissions made by all affected individuals, and these individuals must have an opportunity to respond to submissions made by others. In some cases, this may require FSCO to seek clarification on these submissions.

of 21

Proposed solution:

• For contested applications, the applicant would be given 30 days to respond to any objections and the complainant would then be given 30 days to reply. In addition, complainants would be invited to attend any compliance meetings.

4. Analysis of Trust Law


One of the most significant reasons for delays is the time that is required to review historical plans and funding documents, and to do a trust law analysis for DB pension plans that have applied for a surplus refund or asset transfer.

If FSCO receives an application for a surplus refund, the Superintendent must determine whether the applicant is entitled to a surplus refund when the plan terminates, pursuant to the historical terms of the plan and its funding documents. In the Schmidt ruling, the Supreme Court of Canada set out principles that must be applied when analyzing all plan and funding documents. As a result, FSCO must analyze these documents from the inception of the plan and determine whether the pension fund is a pension trust.

If FSCO receives an application for an asset transfer, the Superintendent requires an analysis of all relevant trust and plan documents, based on the Ontario Court of Appeal’s decision in the Transamerica ruling. This analysis must determine if any of the pension plans involved in the asset transfer are subject to trust provisions that may restrict their ability to transfer assets to another plan.

It is a lengthy process for FSCO to independently review historical plan documents and consider applicants’ legal analyses. To process an application in a timely manner, all documents must be included in the initial application. To facilitate compliance with this requirement, FSCO published a Pension Plan Asset Transfer Checklist, which sets out requirements for asset transfer applications.

Due to the nature and number of required documents, there have been instances where applicants have not been able to locate historical plan and trust documents for the trust law analysis. In some cases, it can take applicants over two years to locate and provide this information to FSCO. In cases where historical documents have not been located, FSCO has made decisions (including a proposal to refuse to consent to the application) based on the available information.

Delays have also resulted from insufficient application tracking (e.g., when FSCO staff grant extensions for compliance letters, or request information from applicants, they do not always follow up on these extensions or requests in a timely fashion).

Proposed solution:

• FSCO has informed the Ministry of Finance of issues arising out of court decisions such as the Transamerica case and the Ministry is currently reviewing this information.

of 21

5. Lack of Service Goals and Performance Measures


FSCO has established internal service goals for processing pension applications. Processing time is the number of calendar days it takes FSCO to provide an initial response, such as a compliance letter or approval, to the submitted application.

FSCO’s service goal is to process all DB applications within 60 days of their initial submission and within 30 days for subsequent submissions. However, applicants are allowed many opportunities to remedy any deficiencies in their applications. As a result, it is difficult to set service goals for closing applications.

Proposed solution:

• Create service goals for approving complete and compliant applications. These service goals would be a guide for the pension industry, as they would set out FSCO’s best efforts for processing DB pension plan applications. In addition, they would assist FSCO staff in setting priorities.

• Have different service goals for different types of applications, as outlined in the table below. • FSCO’s performance will be measured and published on an annual basis.

PROPOSED SERVICE GOALS

FSCO’s proposed service goals for reviewing and approving complete and compliant DB pension plan applications are listed below.

Application type Service goals for complete and compliant applications (number of days)

surplus 150 wind up 120 transfer of assets 120 refund of employer overpayment 90 refund of member contributions 60

PROPOSED PROCESSES

FSCO has developed two processes for reviewing and approving DB pension plan applications, because the review process ultimately depends on whether an application is determined to be (a) complete and compliant, or (b) incomplete and/or non-compliant.

of 21

Process for Complete and Compliant Applications

Definition of a complete and compliant DB pension plan application:

A complete and compliant application is defined as an application that has no missing documents or information, complies with legislative and policy requirements, and is not contested.

Step 1 – The applicant submits a pension plan application. (Only one copy is required. The only exception is an application that requires trust law analysis – such as an application for a surplus, transfer of assets or merger – which requires two copies.)

Step 2 – FSCO reviews the application to ensure it is complete and compliant, and to make sure that all supporting documents have been filed.

Step 3 – If the application is found to be complete and compliant, in accordance with the definition above, FSCO will approve it by a letter or NOP.

Process for Incomplete and/or Non-compliant Applications

Step 1 – The applicant submits a pension plan application. (Only one copy is required. The only exception is an application that requires trust law analysis – such as an application for a surplus, transfer of assets or merger – which requires two copies.)

Step 2 – FSCO reviews the application to ensure it is complete and compliant, and to make sure that all supporting documents have been filed.

Step 3 – If the application is found to be incomplete and/or non-compliant, FSCO will send a compliance letter to the applicant (and other parties, if required). The letter will specify that the applicant has 60 days to respond to the compliance issues.

Step 4 – The applicant responds to FSCO’s compliance letter.

Step 5 – FSCO will review the application again to ensure it is compliant and to make sure that all supporting documents have been filed. If the application is compliant, FSCO will approve it by a letter or NOP.

Step 6 (only applies if the application is non-compliant) – If the application remains non-compliant FSCO will organize a meeting or conference call with the applicant (and other parties, if required), to discuss compliance issues and to set out a timeline for resolving the issues.

Step 7 (only applies if step 6 took place) – FSCO will send the applicant a second compliance letter that summarizes the issues that were discussed at the meeting or conference call.

Step 8 (only applies if steps 6 and 7 took place) – The applicant responds to FSCO’s second compliance letter, in accordance with the agreed timeline.

Step 9 (only applies if steps 6 to 8 took place) – FSCO will review the application for compliance and to ensure that all supporting documents have been filed. If the application is found to be complete and compliant, in accordance with the definition on page 7, FSCO will approve it by a letter or NOP. If the application remains non-compliant, FSCO will issue a NOP to refuse the application.

of 21

Step 10 (only applies if the application is contested) – For contested applications, the applicant will be given 30 days to respond to any objections. The complainant will then be given 30 days to reply. In addition, complainants may be invited to attend any compliance meetings.

STAKEHOLDER INPUT

Pension stakeholders are invited to provide feedback on the following questions:

1. Are the proposed processes fair and equitable? 2. Do you have any concerns regarding the proposed processes? 3. Are FSCO’s proposed service goals acceptable?

CONSULTATION PROCESS

Pension stakeholders are invited to submit written comments or suggestions on FSCO’s proposed service goals and processes for reviewing and approving DB pension plan applications. Submissions are due on or before February 10, 2010.

There are a number of options for submitting your comments.

1) You may send your comments by e-mail to: [email protected] Please include in the subject line of your e-mail “application processing”.

2) You may mail your comments to the following address:

Attention: Pension Policy Unit Financial Services Commission of Ontario 5160 Yonge Street Box 85, 8th Floor Toronto ON M2M 6L9

Please include a subject line in your letter referencing “application processing”.

3) You may send your comments by fax to (416) 226-7787. Please include a subject line in your fax referencing “application processing”.

Please note that submissions will be made publicly available on FSCO’s website (www.fsco.gov.on.ca) at the end of the consultation period. If you do not want your submission to be made public, please clearly indicate this in your submission.

NEXT STEPS

Once the comment period concludes, FSCO will post stakeholders’ submissions on its website. The stakeholder feedback will then be used to:

• Develop and publish new processes for reviewing DB pension plan applications. • Create service goals for approving DB pension applications and publish performance results on

an annual basis.

of 21

APPENDIX 1

How to Provide Comments

FSCO welcomes comments regarding this consultation document. There are a number of options for submitting your comments.

1) You may send your comments by e-mail to: [email protected] Please include in the subject line of your e-mail “application processing”.

2) You may mail your comments to the following address:

Attention: Pension Policy Unit Financial Services Commission of Ontario 5160 Yonge Street Box 85, 8th Floor Toronto ON M2N 6L9

Please include a subject line in your letter referencing “application processing”.

3) You may send your comments by fax to (416) 226-7787. Please include a subject line in your fax referencing “application processing”.

Submissions for “application processing” are due by February 10, 2010.

Thank you for your interest and participation.

Please note that submissions will be made publicly available on FSCO’s website (www.fsco.gov.on.ca) at the end of the consultation period. If you do not want your submission to be made public, please clearly indicate this in your submission.

of 21

REVIEW OF DEFINED BENEFIT PENSION APPLICATION PROCESSING

A CONSULTATION PAPER

Financial Services Commission of Ontario Spring 2009

TABLE OF CONTENTS

PURPOSE..........................................................................................................................................................................3

SCOPE ...............................................................................................................................................................................3

BACKGROUND ................................................................................................................................................................3

OUTLINE............................................................................................................................................................................3

PART 1 – CURRENT PROCESS FOR DB APPLICATIONS ........................................................................................4

I. SUBMITTING AN APPLICATION ......................................................................................................................................4 II. PROCESSING AN APPLICATION .....................................................................................................................................4

a) Complete and Compliant Applications ...........................................................................................................4 b) Incomplete Applications and/or Applications with Compliance Issues.................................................4

III. COMMON ISSUES ASSOCIATED WITH DELAYS .............................................................................................................5 a) Incomplete Applications ....................................................................................................................................5 b) Resolution of Prior Applications......................................................................................................................5 c) Contested Applications ......................................................................................................................................5 d) Analysis of Trust Law .........................................................................................................................................5

IV. FSCO’S DECISIONS......................................................................................................................................................6

PART 2 – PERFORMANCE MEASURES AND PROCESSING RESULTS ................................................................6

I. SERVICE GOALS............................................................................................................................................................6 II. PROCESSING RESULTS .................................................................................................................................................6

STAKEHOLDER INPUT ...................................................................................................................................................7

CONSULTATION PROCESS...........................................................................................................................................9

NEXT STEPS.....................................................................................................................................................................9

APPENDIX A ...................................................................................................................................................................10

APPENDIX B ...................................................................................................................................................................11

Review of Defined Benefit Application Processing Page 2 of 11 Consultation Paper

PURPOSE

This paper is designed to solicit stakeholders’ comments and feedback on the Financial Services Commission of Ontario’s (FSCO) process for reviewing defined benefit (DB) pension plan applications. It seeks input on the entire application process – from the preparation of an application, to FSCO’s proposed decision – as well as appropriate timelines and performance measures.

SCOPE

This paper focuses on DB pension plan applications. Any proposed changes to FSCO’s application review process must be made within the current legislative framework.

BACKGROUND

FSCO is committed to delivering quality service to pension stakeholders, by administering and enforcing the Pension Benefits Act (the PBA) in a fair, efficient and responsive manner. It is responsible for providing front-line regulatory services to a wide range of pension stakeholders, such as plan administrators, industry professionals and pension plan members.

FSCO processes over 10,000 pension transactions per year, excluding annual information return filings. In fiscal year 2007-08, FSCO’s transactions included:

• 500 plan registrations, • 2,400 plan amendments, and • 3,000 general and member inquiries.

FSCO also processes DB pension plan applications, which require the consent of the Superintendent of Financial Services (the Superintendent). This includes applications for pension plan wind-ups, surplus distribution and asset transfers. (See page 4 for a full list of applications that are classified as DB pension plan applications.)

These types of applications represent approximately three per cent of FSCO’s total transactions and are generally processed in a timely manner. However, past experience has revealed that processing complex DB applications consumes a significant amount of time and resources.

OUTLINE

This paper is divided into two parts:

• Part one explains FSCO’s current process for reviewing DB pension plan applications. • Part two discusses FSCO’s current performance measures and the actual time spent

processing DB applications.

After these two sections, FSCO’s current process and performance measure issues are identified, and several questions are listed. Pension stakeholders are invited to review the questions and provide their feedback to FSCO by the end of the consultation period.

For reference purposes, this paper also includes two appendices:


• Appendix A provides data on the average number of days it took to close a complete and compliant application in the 2007-08 fiscal year.

• Appendix B provides data on the average number of days it took to close an incomplete and/or non-compliant application in the 2007-2008 fiscal year.

PART 1 – CURRENT PROCESS FOR DB APPLICATIONS

FSCO processes DB pension plan applications for the following activities:

• Contribution refunds for pension plan members – s.63(7) PBA • Employer overpayment refunds – s. 78(4) PBA • Asset transfers – s.80 PBA • Asset transfers – s.81 PBA • Partial pension plan wind-ups – s.70 PBA • Full pension plan wind-ups – s.70 PBA • Surplus refunds for partial wind-ups – s.78 PBA • Surplus refunds for full wind-ups – s.78 PBA • Surplus refunds for continuing plans – s.78 PBA

I. Submitting an Application

The PBA and regulations set out the requirements for submitting a pension plan application. The onus is on the applicant to:

• Satisfy the Superintendent that the application complies with these requirements. • Demonstrate compliance with FSCO’s pension policies. • Determine whether the plan’s specific circumstances warrant the inclusion of additional

information or documentation to support the application.

Applicants are responsible for determining their obligations under the PBA, its regulations and FSCO’s policies. They may wish to seek professional input, including actuarial or legal advice.

II. Processing an Application

Once an application is received by FSCO, it is reviewed by pension staff to ensure it is complete and compliant. If additional support is required, internal technical, actuarial and legal staff may also be asked to review the application.

Applications are ultimately determined to be either: (a) complete and compliant or (b) incomplete and/or non-compliant.

a) Complete and Compliant Applications If an application is found to be complete and compliant, it can be approved by a letter or Notice of Proposal (NOP).

b) Incomplete Applications and/or Applications with Compliance Issues If compliance issues are identified by FSCO staff during the application review, or any individuals affected by the application (including plan administrators and members), FSCO will provide the


applicant a letter that summarizes these issues. A copy of the letter will also be provided to any affected individual who has made representations to the Superintendent. It will specify the period of time (usually 60 days) the applicant has to respond to the compliance issues and to correct any deficiencies.

III. Common Issues Associated with Delays

a) Incomplete Applications

Delays often result when applications are submitted without key documents (e.g., surplus applications are frequently submitted without relevant historical plan information and/or funding documents). Delays also occur when required supporting documentation is submitted after the application has already been provided to FSCO (e.g., amendments are often received first, followed by notices and then applications).

b) Resolution of Prior Applications

Delays frequently occur when pension plan administrators submit additional applications, before previous applications are processed. In some of these cases, FSCO must process and approve the applications in sequential order; therefore processing delays cannot be avoided.

To avoid these types of delays, applicants must resolve all issues with their first application, before submitting a subsequent application (e.g., if an applicant has not resolved partial wind-up issues, such as failing to address or distribute a surplus as required by the Monsanto ruling, FSCO’s approval of the application will be delayed).

c) Contested Applications

Contested applications take longer to resolve than uncontested applications. This is because the Superintendent must understand and consider submissions made by all affected individuals, and these individuals must have an opportunity to respond to submissions made by others. In some cases, this may require FSCO to seek clarification on these submissions.

d) Analysis of Trust Law

One of the most significant reasons for delays is the time that is required to review historical plans and funding documents, and to analyze trust laws for DB pension plans that have applied for a surplus refund or asset transfer.

If FSCO receives an application for a surplus refund, the Superintendent must determine whether the applicant is entitled to a surplus refund when the plan terminates, pursuant to the historical terms of the plan and its funding documents. In the Schmidt ruling, the Supreme Court of Canada set out principles that must be applied when analyzing all plan and funding documents. As a result, FSCO must analyze these documents from the inception of the plan and determine whether the pension fund is a pension trust.

If FSCO receives an application for an asset transfer, the Superintendent requires an analysis of all relevant trust and plan documents, based on the Ontario Court of Appeal’s decision in the Transamerica ruling. This analysis must determine if any of the pension plans involved in the asset transfer are subject to trust provisions that may restrict their ability to transfer assets to another


plan. FSCO takes a lot of time to independently review historical plan documents and consider applicants’ legal analyses. To process an application in a timely manner, all documents must be included in the initial application. To facilitate compliance with this requirement, FSCO published a Pension Plan Asset Transfer Checklist, which sets out requirements for asset transfer applications.

Due to the nature and number of required documents, there have been instances where applicants have not been able to locate historical plan and trust documents for the trust law analysis. In some cases, it can take applicants over two years to locate and provide this information to FSCO. In cases where historical documents have not been located, FSCO has made decisions (including a proposal to refuse to consent to the application) based on the available information.

Delays have also resulted from insufficient application tracking (e.g., when FSCO staff grant extensions for compliance letters, or request information from applicants, they do not always follow up on these extensions or requests in a timely fashion).

IV. FSCO’s Decisions

Depending on the type of application, FSCO will either use a letter or NOP to communicate its proposed decision for a DB application. With the exception of applications for surplus refunds and employer overpayment refunds, all applications are normally approved by letter. NOPs are only used to communicate refusals.

PART 2 – PERFORMANCE MEASURES AND PROCESSING RESULTS

I. Service Goals

FSCO has established internal service goals for processing pension applications. Processing time is the number of calendar days it takes FSCO to provide an initial response, such as a compliance letter or approval, to the submitted application.

FSCO’s service goal is to process all DB applications within 60 days of their initial submission and within 30 days for subsequent submissions. However, applicants are allowed many opportunities to remedy any deficiencies in their applications. As a result, it is difficult to set service goals for closing applications.

II. Processing Results

FSCO’s application processing results are provided in Appendices A and B. They provide data on the average number of days it took FSCO to close a DB application in fiscal year 2007-08.

Appendix A sets out the average number of days it took to close a complete and compliant application in the 2007-08 fiscal year. Below are highlights from the Appendix:

• FSCO closed 333 DB applications during 2007. Of these applications, 123 or 37 per cent were filed as complete and compliant.

• Complex activities (e.g., asset transfers, wind-ups and surplus refunds) had the lowest percentage of complete and compliant applications.

• Less complicated activities (e.g., employer and employee refunds) had the highest percentage


of complete and compliant applications. • On average, it took FSCO 91 days to close a complete and compliant application.

Appendix B sets out the average number of days it took to close an incomplete and/or non-complaint DB application in the 2007-08 fiscal year. Below are highlights from the Appendix:

• FSCO closed 333 DB applications during 2007. Of these applications, 210 or 63 per cent were filed as incomplete and/or non-compliant.

• Incomplete and/or non-compliant applications took 3.8 times as long to close as complete and compliant applications.

• On average, it took FSCO 344 days to close an incomplete and/or non-compliant application. • With the exception of partial wind-up applications, applications that had the lowest percentage

of completeness and compliance took the longest time to close. • Applications for surplus refunds for full wind-ups and asset transfers under s. 80 and s. 81 of the

PBA had the lowest percentage of complete and compliant applications. On average, these applications also took the longest time to close.

STAKEHOLDER INPUT

Pension stakeholders are invited to provide feedback on the following key issues and questions:

ISSUE 1: INCOMPLETE APPLICATIONS How can FSCO reduce the number of incomplete applications it receives?

1. Should FSCO make more use of standardized application forms or reports? 2. If standardized application forms or reports are developed, should FSCO require the forms to be

completed before the application is accepted? 3. Should FSCO develop more guidelines for applicants? 4. Should FSCO give applicants one opportunity to perfect their applications before making a

decision? 5. Do you have any other suggestions on how FSCO can reduce the number of incomplete

applications it receives?

ISSUE 2: RESOLUTION OF PRIOR TRANSACTIONS Should a pension plan’s application be processed if it has outstanding applications that may influence FSCO’s final approval?

1. Should FSCO give conditional approvals for current applications (e.g., that are subject to the resolution of outstanding issues in prior applications)?

2. Should FSCO refuse subsequent applications if the impact of prior applications cannot be determined?

3. Do you have any other suggestions on how FSCO should deal with the resolution of prior applications?


ISSUE 3: CONTESTED APPLICATIONS FSCO currently approves certain applications by letter (e.g., final decisions not involving a NOP). Its goal is to ensure that all individuals who have an interest in an application are provided an opportunity to request a Financial Services Tribunal hearing to contest a proposal by the Superintendent.

1. How can FSCO reduce the time involved in dealing with contested applications? 2. How should FSCO communicate decisions for contested applications? 3. Do you have any other suggestions on how FSCO should deal with contested applications?

ISSUE 4: ANALYSIS OF TRUST LAW How can FSCO reduce the time it spends processing applications that involve an analysis of trust law?

1. How can FSCO speed up the decision making process for applications for asset transfers, while still complying with the Transamerica decision? (e.g., can the Pension Plan Asset Transfer Checklist be modified to facilitate the process?)

2. How should FSCO process applications for surplus refunds and asset transfers, if they are missing historical documents?

3. How much time should applicants be given to provide missing historical documents before a proposed decision is made?

4. Do you have any other suggestions on how FSCO can reduce the amount of time it spends processing applications that involve an analysis of trust law?

ISSUE 5: DEVELOPING PERFORMANCE MEASURES FSCO intends to establish and publish performance measures for DB application processing. Having performance measures will ensure FSCO develops continuous system improvements, delivers enhancements and allocates resources appropriately. It will also provide an opportunity to track service levels and identify areas for improvement.

1. What criteria should be used to develop performance measures for DB applications? 2. Other than the total time it takes to process an application, what should FSCO use as

performance measures for DB applications? 3. Should these performance measures be consistent among all DB applications (e.g.,

applications for asset transfers, employee refunds, etc.)? 4. Do you have any other suggestions on how FSCO can create and establish performance

measures for processing DB applications?

FSCO also welcomes additional feedback and comments concerning DB application processing and performance measures.


CONSULTATION PROCESS

Pension stakeholders are invited to submit written comments or suggestions on FSCO’s process for reviewing DB pension plan applications. Submissions should be sent to:

Gino Marandola Senior Manager, Operations Financial Services Commission of Ontario 5160 Yonge Street, 4th Floor, Box 85 Toronto ON M2N 6L9 Tel: (416) 226-7820 Fax: (416) 226-7777 E-mail: [email protected]

Please note that any submissions that you make will be considered non-confidential and shared with outside parties upon request, unless you clearly specify otherwise in your document.

NEXT STEPS

Once the comment period concludes, FSCO plans to update its website with a summary of the stakeholder responses and a high-level overview of the next steps, which include:

• Developing a new process for reviewing DB applications. • Creating service goals for approving DB applications. • Publishing performance measures for processing DB applications on an annual basis.


APPENDIX A

The following table provides information on the average number of days it took FSCO to close a complete and compliant application in the 2007-08 fiscal year.

Nature of application

Total number

closed in 2007-08

Number of complete and

compliant applications

Percentage of complete and

compliant applications

Average number of days

Contribution refunds for pension plan members 9 9 100% 44

Employer overpayment refunds 20 15 75% 101 s.80 asset transfers 19 2 11% 30 s.81 asset transfers 28 5 18% 140 Partial pension plan wind-ups 88 15 17% 122 Full pension plan wind-ups 153 76 50% 80 Surplus refunds for partial wind- ups 3 0 0% 0 Surplus refunds for full wind-ups 13 1 8% 187 Surplus refunds for continuing plans 0 0 0% n/a Total 333 123 37% 91

Note: The average time to close an employer overpayment refund application and all surplus applications includes 44 days after the NOP is issued.


APPENDIX B

The following table provides information on the average number of days it took FSCO to close an incomplete or non-compliant application in the 2007-08 fiscal year.

Nature of application

Total number

closed in 2007-08

Average number of days

Number of compliance letters sent

Number of days (%)

with FSCO

Number of days (%) with administrator

Number of days (%) in suspense

Contribution refunds for pension plan members

0 0 0 0 (0%) 0 (0%) 0 (0%)

Employer overpayment refunds 5 737 7 280 (38%) 243 (33%) 214 (29%)

s.80 asset transfers 17 1456 54 233 (16%) 917 (63%) 306 (21%) s.81 asset transfers 23 1194 95 394 (33%) 633 (53%) 167 (14%) Partial pension plan wind-ups 73 371 161 137 (37%) 156 (42%) 78 (21%)

Full pension plan wind-ups 77 235 84 134 (53%) 75 (32%) 26 (15%)

Surplus refunds for partial wind- ups 3 413 6 314 (76%) 99 (24%) 0 (0%)

Surplus refunds for full wind-ups 12 649 36 318 (49%) 260 (40%) 71 (11%)

Surplus refunds for continuing plans 0 0 0 0 (0%) 0 (0%)

Total 210 344 443 127 (37%) 158 (46%) 59 (17%)

Note: An application is considered to be in “suspense” while awaiting: • the resolution of a prior transaction that may impact the application; or • in some cases, the outcome of a court case that may affect the review of the application.


fsco’s proposed solutions, service goals and …fsco has established internal service goals for...

Documents